Obama debt-panel leaders: Make $2T down payment, then final deal

Congress and the White House should agree to a $2 trillion down payment on the federal deficit in a deal to raise the debt ceiling but leave more significant reforms for later, according to the chairmen of President Obama’s fiscal commission.

But broader fiscal reforms must be tackled before the 2012 election, the two write in an exclusive op-ed to be published Tuesday in The Hill.

Negotiators do not have time to agree to more than a large down payment before Aug. 2, when the Treasury Department says the U.S. faces default unless the $14.3 trillion debt ceiling is raised, according to former Republican Sen. Alan Simpson (R-Wyo.) and former Clinton chief of staff Erskine Bowles, the co-chairmen of Obama’s debt commission.

{mosads}“Given that, a two-part approach seems sensible, where policymakers agree to a large down payment now and follow it with more significant and structural reforms in the near future,” Bowles and Simpson write in the op-ed.

While the White House already has embraced a two-step process for dealing with the debt, it has made no promises about when large-scale tax and entitlement reforms would be completed. It has also called for the debt ceiling to be raised by more than $2 trillion so that there would not have to be another vote before Obama’s reelection.

Lawmakers are unlikely to be excited about the prospect of a second vote to raise the debt ceiling before Election Day.

In calling for a down payment, Bowles and Simpson write that it is too tall an order to reach a deal by Aug. 2 that would cut domestic and defense budgets, change the tax code and tackle “the biggest source of our burgeoning debt, growing entitlement spending.”

Still, Bowles and Simpson said the initial down payment “must at least begin to address entitlement growth,” and that policymakers should agree to address the rest of the problem, with “honest process and strict enforcement mechanisms” before the 2012 election.

“We hope that President Obama and Speaker John Boehner (R-Ohio) can overcome the impasse in the negotiations to reach a principled agreement that meets the parameters,” the two write. “Such an agreement on the debt ceiling and on a serious down payment would send a powerful message that our leaders are willing to put national interest ahead of petty partisan interests in order to tackle the terrible tough choices that will be necessary to set our nation on a sustainable fiscal path.”

House Majority Leader Eric Cantor (R-Va.) left talks led by Vice President Biden last week over GOP objections to including any tax increases in a deal. Democrats and the White House say a deal should not consist only of spending cuts.

{mosads}The White House and Democrats have resisted significant changes to Medicare and Social Security. Simpson this month publicly took to task White House National Economic Council Director Gene Sperling for criticizing GOP proposed reforms to those entitlement programs. Simpson said Sperling’s rhetoric only made it harder to get a deal.

Simpson has also blasted the GOP for strictly adhering to Grover Norquist’s pledge against tax increases.

Obama and Biden met with Senate Majority Leader Harry Reid (D-Nev.) on Monday morning and are scheduled to meet with Senate Minority Leader Mitch McConnell (R-Ky.) Monday evening.

In December, the debt commission led by Bowles and Simpson released a proposal to cut deficits by $4.3 trillion over the next decade. In addition to cutting spending, the Bowles-Simpson plan made cuts to Social Security cuts and increased revenue by eliminating tax deductions.

Obama largely ignored the report, which did not get enough support for commission members to win an up-or-down vote from Congress.